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Best Practices to Manage the Vehicle Inventory(Car)
Have you ever bought used car from a dealer? How fast and quickly the sale happen? Selling a used car is very difficult because the market is flooded with a number of new models and the pre-occupied inventory remain unsold and the value of the cars diminishes day by day. As per NADA data, The average dealer sells 60+ new cars every month.
Industry data also shows that nearly half (48 percent, or 96 units) of the average dealer’s new vehicle inventory is older than 90 days. NADA also reports the average dealer earned $160 in floor plan assistance per retail unit last year, or about $155,000.
Sometimes, the margins on the used cars will be high after making some changes and providing standard certificates. The dealers do a proper job by retailing vehicles their customers want, and a less-than-acceptable job with less-desirable cars. And also, the used cars underline the cost of new vehicle inventory inattention to fewer sales, less gross profit, and less benefit from factory floor plan assistance. Here we are suggesting the best methods to manage the car inventory effectively.
1. Lessen Inventory Age and have Fresh Inventory.
As a customer what do you like to buy? Fresh or Old? Cars may not have an expiration date, but newer, fresher inventory will always attract potential buyers more than older vehicles. Concentrate on retailing as close to half of your inventory within 30 days of it arriving on the lot. This will help maximize your front-end gross. Time equals money, so the more time a car sits on the lot, the value of the car will go down, which lowers your gross profit. Plus, creating more inventory turnover in a shorter period of time will help your used car department reach its “turn and earn” goals.
2. Aware of the Average cost for the inventory
The prices of used or pre-owned vehicles should be less than your new inventory. Some customers go with new vehicles when they see old cars at high prices. So make sure the prices of old inventory should not make any impact on the new inventory and reduce the prices of old cars on a timely basis. Keeping lower prices will increase the sales that eventually impact on the average cost for inventory.
3. Adjust or Arrange the inventory as per the market trends
The owner or staff of the showroom or retail should be updated with the research reports and market trends about the vehicles. If SUVs are the better performing than other models, the greatest advantage for providing more space for the SUVs in your inventory. If you’re providing inventory for the model or make that’s limited the profits will be high on such type of cars. Suppose an SUV has high demand in the market demand than a competitor’s SUV, the profits will be high on such type of cars.
4. Rent to own programs
Now, the car dealers can rent the old and unsold inventory to the firms like hire a car, Uber or Lyft to claim the minimum investments on the vehicles. Instead of keeping the inventory unused its good to keep wheels running. This might lower the car value but keeps the car on the perfect condition.
5. Do not keep the Inventory for a long time
The more time you keep the inventory the less value it is going to sell. So keep in mind, try to clear the inventory as soon as possible at best-selling rates.
To sell a car lot of efforts required so be careful while dealing with leads and implement the best practices to manage your inventory effectively. Follow the various sources to keep updated about the auto industry.